To no one’s surprise, Kingfisher Airlines has floated into yet another stormy spell of turbulence.

For the second time in four months, flights are being cancelled without “guests” being told in advance; employees haven’t been paid for months; the airline owes money to the oil companies and airports; the airline’s bank accounts have been frozen; there is no food on flights due to “technical reasons”; Yana Gupta isn’t exhorting us to tighten our seat belts because the in-flight entertainment systems are off, and…

And the king of good times, the pasha of profligacy—the honorary doctorate in “business administration” from South California University—is once again trying to hoodwink his friends in the government. No, not to “bail out” the airline, because as someone who believes in the free market, he is ostensibly against it. No, he just wants the government to tweak its civil aviation policy, which is short hand to bail out all the airlines which are similarly floundering.

Last time round, when “Dr” Vijay Mallya‘s airline was gasping for breath, the government had forced private sector banks to pick up a stake in Kingfisher at a premium—yes, at a premium—in the name of corporate debt restructuring (CDR), convincing sceptics that modern-day capitalism seems to have become about socialising losses and privatising profits, conflict of interest be damned.

Even so, the plight of the excellent but poorly managed airline struggling to stay afloat, even as rumours swirl around of Reliance Industries Limited (RIL) being interested in it, prompt a simple question: should Vijay Mallya—he of Royal Challengers Bangalore, Formula One, the yachts, the calendars, and of course the booze—be rescued? Or should Kingfisher be allowed to breathe its last, even if it has a domino effect on other airlines, thus endangering civil aviation in the country?

Even our own Capt.Gopinath did a fantastic job with Deccan Airlines. What is it with Dr.Mallya that he cannot manage an excellent Airline…is it too much of booze or is it too much of fun he is having with those young girls his grand daughter’s age ?

If we are to beleive in FREE MARKET system the Govt. should keeps its hands off KF. Let market takes its natural course. Infact Govt should let go of Indian Airlines also, another white elephant in the Union stable.

Mallya should be given a chance to revive the airlines. Hope he has realized the errors he might have made in running it. With its cheaper fares and availability to even smaller cities, KF has enabled common citizens to travel by air. It is the Air India which should be shut down.

I wonder whether people are commening on the issue on hand or they are venting out their frustration at the lifestyle of Mallya! I have read similar comments on his lifestyle and blaming the woes of his airline on this. But this is not the case.

Here is why.

Not a single airline in India is showing profits now. If, the lifestyle of Mallya is the reason for Kingfisher to be under loss, what explains the loss incurred by Jet Airways? Spice Jet? Paramount? Indigo? And the national Carrier AirIndia?? Go Air? Ofcourse, Go Air and Indigo are saying that they are earning profit, to what extent and how is anybody’s guess. And given the current scenario, it is only a matter of time before they too start bleeding losses.

There is something inherently wrong with the way airline industry is run in this country. Be it the prices of tickets or the charges levied at the airport or the salaries offered to the crew and staff, the fuel prices and the taxes on fuel, everything points to only one direction. Disaster. Given this scenario, no airline company in India can make profit and run successfully for a long time.

And for those who see a hero in Capt. Gopinath for running AirDeccan at cheap ticket prices, I would say that he was the one who actually started the decline of airline industry in India by introducing those ridiculously cheap rates!! When the bus ticket to Bangalore Chennai was Rs.500/- in Sharma and other transporters, he was offering air tickets at Rs.99!!! He became an instant middle class hero for making people realise their dream of flying, but on a realistic basis, even he could not have sustained this madness for a long time. He sold out at the right time and made money for himself. But his next venture, a logistic company, went belly up within a short period of time. Making a lot of investors lose money.

@asha, Deccan was a no-frills airline, while KF is full service. Vijay Mallya married them and tried to manage them. He failed.
If he had succeeded then he would have been a candidate for Nobel prize and this merger would have been a case-study in all business schools in the world.

Govt should bail out using public tax payers money so that UB group keeps recovering and it makes more profit in their breweries division and IPL and Force India but continues to show loss in its airlines division

A superior part of so called economist Manmohan who gave free hand to reliance and mallya as booming economy and growth index rate and all naughty nasty economic terms is now ruined. he wont die a natural death either.

R V Deshapande & Praful Patel should jointly bid for KFA. Between two of them I guess they can infuse enough equity to provide business class service to all at coach or VRL rates. If this happens Shashi Tharoor does not have to fly cattle class whenever he flies commercial…

Jokes apart, its time for GoI to revisit its Civil Aviation Policy. Lets get in FDI in airlines & airports. Replace DGCA with a well equipped regulator. While we are at it, please send back Choudhary Ajit Singh to Harith Pradesh…..

PS: Through this forum, I am humbly requesting J Jayalalithaji to kindly build an airport in Hosur at the earliest. Thanking you in anticipation….

What people here should do is separate Vijay Mallya from the Airlines itself. yes, he has screwed it up and doesn’t deserve any sympathy. But, we can’t throw the baby with the bathwater.

1. There has to be a Govt. forced management transfer from Mallya, allowing new management with equity infusion into KFA. Penalize Mallya for all omissions and Comissions.

2. Govt. should subsidize long distance air travel as that’s essential for economic growth. Alternatively, Govt. should remove subsidies on all other travel (like railways), as Rail prices are kept unnaturally low, making Airlines compete in price, thus becoming non-viable.

3. Bring in a regulator to ensure there is no predatory pricing, nor there is profiteering. This will ensure a healthy cartelization, though it’ll result in higher fares to flyers.

5. Provide infrastructure without thinking of it as a luxury. Airtravel is no more luxurious than train or bus travel. It is just transportation.

We can’t let our Aviation industry to go down. It is too important for national growth. But, it shouldn’t be done by nationalizing the losses. Instead it should be done in such a way that the better managements (like Indigo) are rewarded for their prudence.

KF is was , a too good airline to be shut , The service was too good the ambiance in the plance was like indra loka . The gagana sakis were like Rambe , oorvashi… that was not just it i was surprised when Menake gave me a MENU CARD to choose my BREAK FAST and on the Menu there were 1 Veg and 1 Non Veg dish listed and that too in a CATTLE CLASS i donno whether it was too good a service or PARAMAVADHI
and compare KF service with stale sand witch and yawning crew of AIR INDIA or only functional Jet airways

i hope either RELIABLE Ambani who is sitting on a pile load of cash 25 billion dollars to resurrect the KF brand by leveraging his cash and refinery business
Emirate airlines or any airline from the gulf who never need to worry about ATF prices to purchase and operate KF brand

The airline industry is a unique industry which has high fixed costs and is very capital intensive. The world over, airlines have seen low profitability with many major airlines facing bankruptcy or near bankruptcy several times in their lifetime. Fuel costs and a host of taxes make up about 50% of the costs.
This industry is very dependent on the state of the economy and vice-versa. Airlines are important for economic growth, business and tourism but get easily affected by the slightest changes in economy unlike other industries which may be more resilient.This is a highly regulated industry and it is not easy for new entrants to easily penetrate the market.
These are some of the reasons why governments of all kinds offer help to airlines. In many countries airlines are owned by the government. It might be best if the government can facilitate a change in KF’s management or bring in other major players to oversee KF airlines. Some of the points suggested by others for better pricing, fuel cost assistance and infrastructure development could be considered.

Kingfisher should be allowed to die. The problem is, Mallya (and Goyal of Jet) have too many Civil Aviation Ministry babus in their pockets. Notice the demands to allow FDI in airlines. Goyal used to whimper about it once in a while, but now that Mallya has loudly started to ask for it, Goyal has joined the (one man) chorus.

They probably think it is easy to hoodwink foreign investors while exiting their own capital. Either that, or there is some kind of foreign money that doesn’t want to ask too many questions. Goyal has had those questions thrown at him since the beginning of Jet, but there have been no answers. How does an airline survive for so long when it has lost a lot more money than it has made?

Our civil aviation industry is handicapped by a) the various subsidies provided to other means of transport and more importantly b) the higher taxation on aviation fuel that are levied by the states. Since fuel is the single biggest expense in running an airline, this puts all Indian airlines at a disadvantage. Airlines are a tough business in the best of times. There are hardly any airlines in the world that have been profitable over their lifetimes.

On top of this, the Civil Aviation Ministry and the DGCA are operating in the 1930s and don’t understand what it takes to manage a modern civil aviation system. They are too beholden to the airlines which happen to be the only outfits with the money to “manage” through the bureaucracy and the red-tape. The tail therefore wags the dog.

Dear Sir: This is Ramalinga Raju Garu of Satyam fame; I would like to geet a few of those Airbuses from KingFisher Airlines when it goes out of business, so I can fly to all my Palaces around the world.

I do not recall seeing so many comments and commentaries concerning Jet’s buyout of Sahara or the closure of East-West Airlines back in the day. But here many things need to be understood, and it is going to be difficult in trying to justify actions in hindsight, especially with the number of issues, concerning this industry.

Yes Vijay Mallya (VM) is a showman, but in all his escapades he has always promoted his company, (excluding the purchase of Indian Empress, his B.Jet, and his Son. These have not come into the limelight as lot as the other items).

The government, and VM, are all a factor here.

The government with the High Taxes on Fuel is a major cause of worry for the full industry, so is the restriction in flying times. Planes are meant and serviced to maintain an almost continuous schedule. You can’t earn money when it is on the ground. In fact you spend money. And there are comments here and else where concerning Air Deccan. VM wanted to get into the international market, it is where the money was, but was restricted by law. He couldn’t purchase Air Deccan, operate it as a subsidiary and offer full international flights through KF, he had to merge them and so manged to sneak into the door. It didn’t pan out as planned, but was the only option available to target the international market. In those circumstances, it was a good plan.

VM is to blame for not stepping back from the operations of the airline, and allowing it to function through the people he hired to run it. Same with Air India, and Indian Airlines, they (politicians) should allow the people hired to run the airline, and offer complete support and freedom in operating the airline.

Saying KF, Air India, should just close and get out of the market is silly, especially considering what you then would pay to fly on the other airlines. I do not and will never support a government bail out package for any industry, including PSU, but at the same time the government, should allow free market to be free market and stop regulating the market (in a few chosen sectors, God forbid they deregulate telecom, mining and the sort). Establish the guidelines for safety and consumer protection, not on how to run the company, where you can buying the fuel from, or who your partners can be.

The fares and services we enjoy today in the aviation industry, was thanks to Air Deccan and KF. Remembering their hording above Jet’s saying they made them change was very true(Do not remember where or when, just Google it). KF will come back, and survive, it needs too, otherwise we do require a competitor to Jet. If not, we will be paying very, very high prices to travel in India.

There is nothing need to feed the white elephant like Kingfisher Airlines. Let is be closed. I travel in AC coaches of trains and those fares are much cheaper than air fares. There are also people who are not even able to buy second class fares for the train and travel without ticket. Poor or middle class will lose nothing by closure of Kingfisher Airlines.

Mallya deserves the nasty tweets that are doing the rounds
•
Naresh Goyal of Jet and Mallya of Kingfisher Airlines should merge… their new Airline would be called GOL-MALL AIRLINES !….. GOyaL combines with MALLya

•
What’s the Difference between Vijay Mallya and Richard Branson ?… Branson’s Airline is Virgin while Mallya’s is F____d !

•
Mallya was to fly to New Delhi to explain to the Prime Minister about KFA woes but his flight got cancelled !….

Companies may go sick but Promoters rarely do !….

….Employees have not been paid for three months now, Taxes have not been paid,Aviation Turbine Fuel has not been paid for as also Lease Rentals on the Aircraft… the fact is that Mallya simply has failed to run KFA properly…he had infact no idea of how to run an airline in the first place…

RR Comments – The fundamental issue is, somebody needs to urgently look into the financials of this company to see where is the money seeping ?

After all, you cannot beg saying I don’t have money to fed my family ( employees) , on the other hand you spend your holiday on some island, buy a cricket team, and what not….

NO bailout for Kingfisher. Let the damn thing shut down if Mallya doesn’t know how to handle business. Why should public money go to fund him? I cannot believe there are people who say that there should be a bailout!

He should sell his stake in ‘royal challengers(cricket team)’ and then he should try to revive KF airlines . This airlines truly world class to startwith, its a great example of corporate misgovernance.

Did you observe the Veerappa Moily jumping into the fray to support Mallya and the diseased airlines and SBI deciding to loan money to Mallya, throwing good money after bad money..crony capitalism is here to stay in India

You are missing the point. Why do you compare Kingfisher airlines to Satyam? Airlines is a loss-making industry (over-capacity, price wars, capital intensive, uncontrollable fixed and rising expenses) whereas IT services is a highly profitable industry.

Airline industry in general has poor economics but ‘sexy’, so people like Mallya and people with questionable background rush in. All their calculation is simple – ultimately screw the governement and banks with PR and scare tactics (your ref to an article is a case in point). This has happened/happening all over the world, not just in India.

Kris: What you should know. Govt. didn’t bail out Satyam. It just ensured the old management was kicked out for a transition team, and sold the assets to another company. Agreeably, IT industry is profitable, but, that’s not at issue here.

If govt. (Ministry of Corporate Affairs), thinks that a public company is going insolvent and that can hurt a lot of people, then has power & obligation to to restructure the board of the company, and give it a chance to survive. This happens in all economies, because in economics a ‘market’ is the creation of the govt.

All the problems you mentioned are for Govt. to resolve. Govt. should get out of Aviation business, bring in a regulator to ensure pricing and schedule stability. If a particular business fails without causing huge disturbance to public infrastructure it is fine, but not if whole industry is in stress. There is something wrong with the ‘market’ then.

There is nothing called over-capacity in a country where lowest percentage fly. People can’t find enough train tickets, but can’t afford flying.

It is absurd for govt. to provide subsidy on Diesel & Trains, but charge huge tax on ATF. It is crazy for govt. to have free Bus stations and train stations, but charge huge Airport fee. Airports don’t have good public transport connectivity making people rely on expensive taxis. Indian ATF prices are above 50% that of rest of asia-pacific. Fuel is the single biggest component in Airline operations. All this makes airtravel unaffordable. Why should people travel to Bangalore-Delhi in a train wasting 2 days, when they can travel in a few hours? If the price difference is not huge, people will do that.

Check prices of Bus/Train/Flight in developed countries. For point-to-point travel for medium to large distance, they are not lopsidedly different. In most developed economies, airports are considered part of overall infrastructure mix – not a luxury.

So, What is needed is a combined relief to airline industry, without discouraging good managements like that of Indigo. One possible way to do that is to provide incentives for Indigo to take over KFA, by ensuring the liabilities are recovered from UB/Mallya (the guarantors to the loans).

Problem is larger than KFA. Jet Airways, a reasonably well managed company is also in trouble. Except Indigo, which turns in a small profit all other companies are making loss. Air India is a drain on all tax payers.

Should they be allowed to fail as well? How long before they all shut down?

You contradict yourself over and over again by saying in so many ways “government is the problem and governement is the solution, It should do everything and it should do nothing”.

The problem is corruption that has seeped into all aspects of our lives. We are corrupt ourselves (identication with the caste, etc. Why are you so partial to Mallya?). If we don’t change, government won’t change.

It is the arrogance of some people in private sector, like Mallyas and Ambanis, who feel they can do anything – bribe and manipulate government policies to their advantage ending up screwing shareholders and banks, and public in general.

You are coming back to same thing! Accusing me off being a mallya afficianado.

I have been consistent in saying this, the business of the government is to govern. Governing is a function of creating a set of rules and systems that creates an efficient marketplace, where economic activity can take place. If there is a limp in market place Government changes rules to support marketplace, not throw it to the sea.

If our governance is bad, then market place gets hurt. Government can do so by laws (restrictions), taxes (incentives/disincentive).

What am I asking here? I am asking govt. to get out of business of running aircraft and create an efficient market place where various companies can compete. And if a company fails inspite of that, facilitate its digestion by others within a framework allowed by rules and laws of market place. I wasn’t asking for KFA to be given money (like govt. is doing with Air India), I am asking for it to be restructured and changed.

India’s current average seat occupancy ratio is around 80%. Still companies are failing!! Worldwide 70% is profitability threshold. In India Only Indigo manages 93% occupancy and is succeeding (that and other reasons).

KFA has 20% share of aviation market. Take out KFA, other airliners won’t be able to manage the existing demand, leave alone growth in demand. Thus the prices of tickets will increase so much, that it’ll discourage even the 2-3% of Indian travelers who can afford to fly right now.

If we want to develop as a nation, we need mobility, with 15-20% of our travelers flying. For that to happen the price difference between flying and railways should be about 30-50%.

Currently demand won’t increase because of high costs (100% or more) and Supply won’t increase unless the sector is profitable. Consider following:

1. Our airport fees of Rs.300-400. In US airports can’t charge above US$4 as airport fee, that in spite of average 1hr flight time ticket price being US$150. So airport fee is <3% of ticket cost. In india, it can run up to 10-15%

2. Try eating anything in airport. In USA prices are marked up by 20-30% from outside. In India, prices are jacked up by 200-300%

3. Transport to airport is fantastic in most developed countries. In Shanghai, i had multiple choices of commute and while going I went by Maglev, which cost me about Rs700 (at a speed of 400km/hr). While coming back I took a taxi that cost me about Rs.800. But, I had alternatives of Subway (Rs.80, or Shuttle Rs.200). Same is the case in Singapore, or most other European and US cities. Shuttle/MRT/Metro/Subway makes commute to airport cheap.

If most companies in market place are failing, with so much latent demand for transportation (check railways waiting list), it is mostly because of the inefficiency created by the rules that govern the aviation marketplace, which is why solution can only come from govt.

If not, what will happen is we'll revert back to the days when Air travel was 4-8 times as expensive as Railways. That's not what country needs.

We should be questioning Gopinath how he managed to finance Deccan? How Gopinath got away with making losses for so long? Who was financing him in spite of huge losses? Who is behind holding off RBI/CBI inquiries regarding Gopinanth and Deccan?

Kris: CBI/RBI inquiry in to Gopinath & Deccan? Any reference? AFAIK, his finances were above board.

Besides, the point isn’t gopinath, point is his message. It makes perfect sense. Your anger is with Mallya, and that’s justified. He is the one that should be punished, Penalized. Not KFA, passengers or general public (in way of losses to public banks & taxes to govt.). There is a way to punish Mallya while rescuing KFA.

Kris: Oh fine. Since, your irritation is with ‘people like me’, perhaps you are justified in your arguments against a company called KFA. Only ‘people like me’ fly and it doesn’t matter to ‘people not like me’, if an industry is destroyed.

Apparently, some prejudices are in play here against ‘some type of people’, in which you have apparently included Capt Gopinath, and perhaps the entire entrepreneurial class.

I leave it to your superior ‘rationality’ to figure out what is right, as an irrational ‘person like me’ can never figure it out.

If folks here listened to Kris & co, then very soon we’ll have to shut down Jet, Go-Air, SpiceJet too. Jet is running below on salaries by a month, and pilots are threatening to go on strike. Spicejet is in similar boat, but just got a lifeline in the form of investment from Marans.

Now, Maran is a hate figure for many. Go-Air promotor (Wadia) is also is not a paragon of virtue. Perhaps there is something against Naresh Goyal as well. Afterall his source of funding has been questioned in the past too.

So, that’ll leave us Air-India and Indigo. A situation similar to the one that existed back in mid 90s.

You know it already, yet you just force us to repeat what is discussed before, unnecessarily. What a waste of time? Let us move on to topics where we can understand better about the issues and in the process ourselvess. Grow up man.

“People like you” means people you admire and defend (directly or indirectly) irrespective of what they do – that includes Mallya, Gopinath, NRN, Infosys, Anant Kumar, Sushma Swaraj, Advani, BJP, RSS, Brahminism. Got it?

KIngfisher issue is simple. Its finances are out of whack, unsustainable with very poor corporate governance. Why should bank and govt bail it out? We heard all your arguments – your defense is poor and just let it go. We are tired of hearing the same BS.

And while people are looking at the sideshow that is Kingfisher Airlines, the government has approved what is basically a Rs.1cr per employee bailout of Air India. I’d like to see where that money goes.

We Indians have a peculiar democracy and a weird socio-economic system. There is one law for government owned airlines and a different one for others. I think governance is to blame! AI kept many int’l routes and effed other pvt airlines. Also KFA were made to fly uneconomic routes from day 1 and they expanded too fast! BTW all airlines in the World are loss-making entities. The best solution IMHO is to disband Air India or make them fly only domestic routes. All Int’l travel should be handled by private airlines. Sure ministers and Babus can be accommodated on these private airlines where the RTI rules will turf out these wasteful excursions indulged by these morons.

Comparing infrastructure in other countries is useless! Even running buses and providing smooth roads are more useful activities than maglevs and other forms of rail transport. It is quite obvious for all his genius Mallya is a duffer and he cannot comprehend the airline biz!

Mallya, since he inherited the empire his father Vittal Mallya built, has been a bad businessman. He was broke long ago. Veteran journalists will remember how he flew them to a week-long part at his Goa mansion and treat them royally. Their only task was to go and write that ‘MALLYA IS SAFE AND SOUND’ which they did. Which of his companies are profitable or were profitable. He passes off as a shrewd businessman. Time someone tells his “The King is not wearing any clothes’.